How Does Health Insurance Work in the UAE?

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Most of us have read, heard, and seen people talk about the importance of having healthcare insurance plans. These plans help the policyholder in saving a significant amount of money when it comes to regular quality medical care services and also softens the sudden blow of a huge expense. Most people have a rough idea of how medical insurance works. You pay a monthly or yearly premium and in return, the insurance company pays for your covered medical expenses on submitting a claim. However, this process has several other layers that every health insurance policyholder must understand. This article will answer all your questions about “how does health insurance work” in an in-depth manner.

The Components of a Health Insurance Plan

Every health insurance plan can be broken down into some basic parts. You must understand the function and coverage of these parts to know how medical insurance works. These parts or benefits have different definitions and may even come into effect at different times. Following are the basic parts of a health insurance plan:

  • Assured Sum: The assured sum or covered sum of a health insurance plan is the maximum amount you can claim from the insurance company for medical expenses. If the assured sum of your plan is AED 1 million, the insurance company will cover your medical expenses up to that limit only. This is inclusive of all the main and miscellaneous expenses.
  • Core Benefits: The core benefits of a health insurance plan are those benefits that you get coverage for from day one. These are the benefits that your basic premium buys you. Most health insurance plans have the same kind of core benefits. These can include, emergency medical treatment, in-patient hospitalization, prescription medicine cover, lab test, and radiology test cover, pre-and post-hospitalization services, pre-existing illness cover, and rehabilitation services. Some more comprehensive plans offer additional benefits as core benefits. For example, dental care, optical care, and maternity cover.
  • In-Patient and Out-Patient Benefits: The medical treatments and procedures that require you to get hospitalized are categorized as an in-patient. For example, surgeries, intensive care, etc. While the procedures and services that do not require hospitalization are known as out-patient. For example, dental procedures, lab tests, etc.
  • Add-Ons or Riders: Most health insurance plans provide you with the option to choose additional benefits and cover by paying an extra premium amount for them. These covers are known as add-ons. Some popular health insurance add-ons or riders can include dental covers, optical covers, maternity covers, the geographical extension of your plan, etc.
  • Core Benefits with a Waiting Period: Some core benefits in a health insurance plan may come with a waiting period. For example, the pre-existing condition cover and maternity covers. If a certain benefit has a waiting period, it will mean that the insurance coverage for that benefit will begin after the end of this said period, not right after buying the plan. So, a waiting period of 6 months for maternity cover in a health insurance plan would mean that this coverage will begin 6 months after you bought the plan.
  • Sub-Limits: Sub-limits is the smaller version of the assured sum. Just like an assured sum decides the total amount of medical expenses you can claim, sub-limits decide the total expenses the insurance company will cover for a particular benefit. So, if you have a sub-limit of AED 1500 on prescription medicine, the insurance company will only pay up to that amount.

Components of the Payment Cycle

There are a few main things you must remember when learning how health insurance works – premiums, deductibles, co-pay, co-insurance, and out-of-pocket maximum. These components help in calculating the payment cycles and procedures of a health insurance plan.

  • Premiums: This is the amount that you pay annually or monthly to the insurance company in return for taking the risk to insure your health. Whether or not you make a claim, the premium has to be on time to make sure that the plan continues.
  • Deductibles: Most health insurance plans come with deductibles. This is the number of medical expenses you have to cover yourself before the insurance steps in pay for the agreed-upon share.
  • Co-Pay: This is an arrangement that defines a set amount to be covered by the policyholder out of the total medical expense of a covered benefit. Take doctor consultation for example. If the co-pay for this benefit is AED 50, you will have to pay AED 50 for every doctor consultation. The rest of the doctor consultation expenses will be covered by the insurance company. Co-pay is always a pre-decided amount and it applies to benefits like lab tests, doctor visits, etc. This fixed amount can vary as per each service.
  • Coinsurance: This is a percentage of the total bill amount of your medical services that you are supposed to pay. Coinsurance is decided in percentage and stays the same across all services. Coinsurance is separate from deductibles and co-pay. For example, if your coinsurance is set at 20%, the insurance company will pay only 80% of the total bill amount.
  • Out-of-Pocket Maximum: An insurance plan always comes with an upper limit for out-of-pocket expenses. Deductibles, co-pay, and coinsurance all contribute to this limit. Once you reach this limit, you do not have to pay anything after that. The insurance company pays the rest of the expenses even if the coinsurance amount is remaining.

Deductibles, co-pay, and coinsurance are three different amounts that you as the policyholder have to pay off as per the decided ratio. Coinsurance comes into play after you have completed the pre-decided deductible amount. Co-pay keeps on coming as long as you keep getting the services or as long as the out-of-pocket maximum amount has been met.

So, first, you pay deductibles along with co-pay for the services it applies to. Once all the deductible has been paid, you pay the coinsurance amount from the total bill and then the rest of the expenses. Most insurance plans come with all three components – deductibles, co-pay, and coinsurance.

Suppose your medical bills for a certain treatment are coming up to be AED 60,000. There is a deductible of AED 5000 and the coinsurance is 20%. And the maximum out-of-pocket maximum is set at AED 8,000.

First, you will pay the deductible amount in full and then go to the coinsurance amount. After that, you will pay the coinsurance amount until either you have paid it in full or have reached the maximum limit on out-of-pocket expenses. In this case, you will pay AED 8,000 and after that, the insurance company will pay the remaining AED 52,000.


To know more about how a health insurance plan works, you will have to understand everything from the payment components to plan benefits, coverage limits, waiting period, riders, etc. Insurance plans can be complicated when you try to get a rough idea. The best way to understand how private health insurance plans work is to understand every component separately and then apply them all together. Make sure that you read policy wordings and understand first-hand and understand what kind of charges your plan specifically.

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